In the clearest sign that Spain’s economy is recovering from the sharp, negative impact of the coronavirus pandemic, the number of mortgages being approved in the country is beginning to increase considerably. The Spanish National Institute of Statistics (INE) released a report that revealed that in June of this year, the number of mortgage applications being approved was 12% higher than in the same month in 2021. June 2022 saw 42,676 mortgage loans being approved across Spain.
But what does this mean for your own mortgage application, or if you’re planning to own a home in Spain? Here’s everything you need to know:
Loan Rates Returning to Pre-Pandemic Levels
The increase in the number of loans being approved in Spain is at its highest level since the pre-pandemic figures of 2010. During June 2010, more than 56,700 mortgage loans were approved. This means that borrowing is moving in the right direction in the country, with more people feeling comfortable enough to invest in property again.
The amount that individuals are investing in property is also growing. The average value of a mortgage loan in Spain has increased by 6% year on year which, in real terms, means that the average mortgage holder is borrowing 147,539 euros to invest in property. When this increased average loan value is coupled with the increased number of loans being granted, that means that the total amount that is being borrowed has increased in real terms by 18.7%, to a total of 6,309.28 million euros.
Where Are People Buying Property?
We know that more mortgages are being granted in Spain, but where are those people being granted mortgages investing in property? The autonomous region with the largest number of mortgage approvals in the period we are focusing on is Madrid, with 8,026 approved mortgage applications. This was followed by Andalusia with 7,918 approved mortgage applications and Catalonia in third place with 6,905 approved mortgage applications. These three regions are popular with both Spanish residents and foreign investors, so it is not surprising that they have attracted the largest number of mortgaged buyers across the country.
In terms of the amount being lent per property, the communities in which the most capital was lent for home mortgages were:
- Madrid (1,799.8 million euros)
- Catalonia (1,113.3 million euros)
- Andalusia (1,018.1 million euros)
Other Variables to Consider
Securing a mortgage loan in Spain is a relatively straightforward process, and much like in the UK and other countries across Europe, the individuals securing the loan can decide whether to borrow on a fixed or variable rate basis. In June 2022, 27% of the mortgages approved were on a variable rate basis, whilst 73% were on a fixed rate basis, with the average interest rates sitting at 2.06% for the variable rate and 2.64% for the fixed rate options.
This means that the average rate of the approved loans was 2.48% and the average repayment period of the loans was 23 years.
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